Your spending options are growing as money diversifies

With so many different forms of payment now available, from smart phones to bitcoins, what is the future of money?

The World Today
5 minute READ

Dr Paola Subacchi

Former Research Director, International Economics

The 1970s were years of high inflation in Italy. As the price of goods increased and the lira, a high denomination currency, was debased, the country faced a chronic lack of small change. Those were the years when coins were used to operate all sorts of devices, from pay phones to launderettes, vending machines and jukeboxes.

Minting coins is more expensive than printing banknotes and the metal content of coins is often – especially at times of high inflation – higher than their nominal value. So, for some years the amount of coins in circulation in Italy was much lower than demand. People began to hoard loose change.

Shopkeepers reacted to this scarcity by replacing small change with sweets, stamps and other items of small value. Customers were not happy. This was a one-way solution as no shopkeeper would accept a bunch of sweets in lieu of money.

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